Telstra's apparent non-compliant bid has ruled the telco out of the running for the $4.7 billion National Broadband Network, Terria chairman Michael Egan claimed this afternoon.

Telstra out of the running?(Credit: Lurcher racing at Selby game fair, Nebbish1. CC2.0)

"They're out of the bid," Egan told ZDNet.com.au today,
saying that no government in its right mind would let itself be
bullied in the way he said the Telstra document was trying to do. "This is
what they've tried with the Howard government," he said.

"No government would give into that sort of blackmail... unless
it was a Robert Mugabe government," he continued.

Egan wouldn't even call Telstra's document a bid. "It's not
a half bid. It's not a bid at all," he said, calling the speeds
and coverage mentioned in the document "outrageous". "They've shot themselves in the head," he said.

Ovum telecommunications analyst David Kennedy, however, did not
think the telco had definitely ruled itself out, saying that by
lodging a short, allegedly non-compliant bid, Telstra had kept itself in the
running for the Government's funding.

Kennedy saw the document as an invitation for "senior levels"
of government meaning Communications Minister Stephen Conroy and
Prime Minister Kevin Rudd, to sit down with Telstra and work out a
deal.

Whether the invitation would be taken up depended on the Terria-backed Optus Network Investments (ONI) bid, Kennedy said. "If the department doesn't feel
they can accept the Optus bid they're going to find themselves in
the position where they can't not talk to Telstra," he said.

Kennedy believed that the other bids would have to be very
strong to compete with Telstra's financial and technical
abilities.

Gartner analyst Robin Simpson said it was a Mexican standoff at which
he wasn't sure the government would blink. He believed that Telstra would be "convinced" into very soon filing a proper bid,
which would allow it to continue in the process, unless the government decided
that Acacia's, Axia's or Terria's bid was good enough to exclude them.

He said Telstra's strategy was risky, especially given that Terria's
bid seemed to be compliant, saying in the release it meant to meet
the 98 per cent coverage objective. "I think [Telstra's] painted themselves into a corner," he said.